By Tom Struble
May 18, 2018 at 5:00 am ET
After nearly three years of top-level vacancies, our nation’s chief competition and consumer protection agency, the Federal Trade Commission, is finally back to full strength. Accordingly, many are now looking at the FTC with fresh optimism, hoping its new leadership can help tackle the most challenging issues facing consumers and competitors today.
I share this hope, but want to urge a note of caution: Good headlines don’t always yield good results.
Much of the important work the FTC does tends to fly below the radar. For example, the FTC recently convinced tech giants Uber and Qualcomm to improve their privacy and patent-licensing practices, respectively. Additionally, outside the Part 3 enforcement process, the FTC recently tackled the tricky topic of informational injuries, seeking to better understand how Section 5’s consumer-protection framework can account for non-financial privacy harms — like personal embarrassment, general feelings of creepiness or even potential interference with the electoral process. From safer ride-hailing services and cheaper smartphones to a framework better equipped to tackle the difficult privacy issues of the 21st century, these moves will yield meaningful and lasting benefits for millions of American consumers.
But reports of these efforts rarely stick in the headlines for more than a day or two — if they make it there at all — and that’s a shame. Instead, Americans see vast amounts of ink spilled over high-profile investigations into Facebook and Equifax’s recent privacy mishaps, the ongoing antitrust challenge to AT&T’s acquisition of Time Warner, and what regulators in the European Union are set to impose later this month with their General Data Protection Regulation.
Chairman Joseph Simons and Commissioners Noah Philips, Christine Wilson, Rohit Chopra and Rebecca Slaughter are all surely aware of these headlines, and there will be much pressure to respond to this vocal outrage by doing something. But the FTC’s mandate isn’t to “do something” — it is to promote the welfare of consumers. It’s through this consumer-welfare lens that Section 5’s competition and consumer-protection standards have developed over time to accommodate new technologies, business models and economic learning — all of which have proven to be a tremendous boon to American consumers and the economy writ large. This body of work should not be cast aside lightly.
To see what happens when competition agencies go for headlines rather than real improvements, consider European Union Competition Commissioner Margrethe Vestager, who has been making headline after headline in her aggressive pursuit of major tech companies. Recently, she issued fines of $122 million to Facebook, $1.2 billion to Qualcomm and $2.7 billion to Google. These are big numbers, but they aren’t necessarily real results. For one thing, Qualcomm and Google are appealing the latter two fines, so this money may never make its way to European coffers. More importantly, though, it’s unclear whether European consumers are any better off today because of such efforts. Arguably, aggressive fines and the sweeping new GDPR rules will actually make Europe even less friendly to investment and innovation, further widening the gap between their technology ecosystem and ours.
If the FTC is going to make good on its core consumer commitment, it can start by looking under the hood at its own procedures. William Kovacic, a former FTC chairman, recently made this point to The Washington Post: “As a country, do we want to do this on the cheap, or do we want to do this the right way? And in a sense, we’ve been trying to do it on the cheap.”
Indeed, academics and civil society groups have long decried FTC process failures that have undercut the agency’s dual mission of protecting consumers and competition. Internal-process reforms will likely never make front-page news, but they can have a tremendous impact on consumer welfare if they are done right. Such reforms may include reinvigorating the FTC’s Part 3 adjudicatory process — something Simons spoke highly of while directing the FTC’s Competition Bureau in the early 2000s — or finally undertaking a consumer-protection rulemaking under Section 18.
Ultimately, what matters most is not the number of complaints or the size of fines. What matters are the actual effects that FTC guidance and enforcement (or lack thereof) have on consumer welfare. Those results aren’t easy to come by; they take hard work, due diligence and a fair amount of patience. These efforts don’t make for catchy headlines, but they do yield great outcomes for consumers. In these chaotic and headline-driven times, the new FTC leadership would do well to keep this in mind.
Tom Struble is technology policy manager at the R Street Institute, a free-market think tank based in Washington, D.C.
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